The Energy Department isn’t spending outrageous amounts of money on its IT shared services program but there are areas where the agency could manage its costs better, according to a new inspector general audit.
The IG contracted with audit firm KPMG to review whether the Energy IT Services (EITS) program was a cost effective way for the department to manage technology at its component offices. In the May 2 report, auditors said they were unable to determine whether the program costs were “reasonable” but did find that a lack of governance was leading to unrecovered funds.
Download: Energy IT Services Federal Support Costs
Through the EITS program, department components have access to a range of IT support services. These services are managed through EITS, with components repaying the program office from their own budgets.
The review found that EITS recovered 103 percent of costs in 2013 but only 79 percent in 2014 — the most recent year in which full data sets were available.
“Without improvements and in light of current trends, the deficit caused by not recovering EITS costs will continue to widen as the costs of managing the EITS shared services program increase in future years and recovery rates remain static,” the report reads.
The main reason EITS is not being reimbursed properly is the program office has not updated its pricing list in at least four years. Some officials told KPMG the costs had not been updated since EITS was established in 2001.
“For instance, prices charged to EITS customers for desktop services (hardware and software), cybersecurity and voice, video and data services had not changed in several years even though the cost of the services may have increased,” according to the report.
The program also failed to take into account rising labor costs — particularly important as the department continues to rely more on contractors.
Auditors suggested this could be a prime reason for the slippage in recovered expenses from 2013 to 2014. While KPMG did not have enough data on 2015 to include it in the review, “Officials expected the cost of managing EITS would increase and there were no plans to increase the rates charged to customers,” meaning the situation is likely only getting worse.
Energy has made some good moves with the program, auditors found. For instance, the program has built-in “operational efficiencies” that are keeping the cost per user down and is offering a comprehensive range of services.
However, “Although these are positive actions, without improvements the department may be unable to ensure that the EITS program is managed effectively,” namely by, “Ensuring that the costs of services provided are appropriately identified, the quality of services provided to customers are maximized and the costs of services are fully recovered.”
EITS managers agreed with the auditor’s recommendations and told the IG “corrective actions had been initiated or completed,” including creating a new cost model for 2016 that should help them reach 100 percent recovery.
